Party of National Unity (PNU) president Highvie Hamududu says the measures which government has put in place to address Zambia’s current economic problems are not enough.
And Hamududu says government should consider partially privatizing some parastatals to create an appetite for capital inflows in the country.
In an interview, Tuesday, Hamududu said even if the austerity measures were implemented to their entirety, they were not enough to address the current fiscal imbalance.
He said even if Zambia managed to clinch a deal with the International Monetary Fund, not even that bailout could be enough to fix the economy.
“The measures that the government has put in place to address the fiscal imbalance are not enough. Even austerity measures, good as they are and welcome, even if they are implemented in their entirety are not enough to correct the current fiscal imbalance. And what you see on the exchange rate is a symptom of an economic disequilibrium that must be treated from the source. The government does not have enough money and the economy is not generating enough resources. And even [from] the resources that are being generated, there is little money that is being invested to address the fiscal imbalance. The solution to our current economic problems lies beyond the measures that government has put in place. So, they must do more. It requires radical measures,” Hamududu said.
“Today is the exchange rate, tomorrow it will be this and the other day it will be that. The government must go to the real centre of the problem which is that the budget is not balancing and the money that the government is raising through taxes are not enough to fill the fiscal gap. Normally the government is financed through taxes and through loans but the option of loan, we have reached the upper limit where debt servicing has become a problem while debt is supposed to be a solution, but [in our case] it has become a bigger problem for economic recovery. And therefore the issue of debt as a way of solving problems is out. The routes that government has been using to address the economic problems are exhausted. They are addressing a very small component of a bigger problem. Government must look for more radical measures to close the fiscal gap. And what you see now with the kwacha is that the economy is not expanding and the exports are affected because growth is slow. Yes, we need the IMF but even the IMF bailout will not be enough.”
He proposed that government could transfer some debt to the private sector by putting most big projects under the Public-Private Partnership (PPP).
“Government must raise money elsewhere. The bigger infrastructure projects must go on PPP. Like now [they are saying that] they want to borrow money for the Chipata-Serenje railway line from China, no. That [project] must be done under PPP. Let the private sector build it, operate, and transfer later to the government. There are some debts that can be removed from government books to the private sector. Even now, the current debt can be reduced because you can remove, for example, the Lusaka-Ndola dual carriageway can be given to the private sector and attach those tolls to the recovery of the money [which] they have put in as they have done for Kasumbalesa border. The PPP approach is what is behind the Malaysian economic miracle under the current guy who has come back,” he said.
“What is so difficult in putting the Kafue Gorge Lower to the private sector and they sale power to Zesco and remove that debt from government books? The new Ndola airport is being financed on a debt. That debt can be removed from government books and give it to those people who are constructing on “Finance Build, Operate, and Transfer (FBOT)” so that the portion of the government debt repayment can reduce. We must not stop putting up infrastructure. What we must stop is getting loans to finance infrastructure.”
And Hamududu urged the Industrial Development Corporation (IDC) to provide solutions by partially privatizing some of the parastatals in order to create an appetite for capital inflows in the country.
“The government must also do partial privatization of some of the parastatals. The IDC must provide solutions to some of the bigger problems. Can you imagine the Zambia National Airports gave K5 million dividends to government? That is an insult. Is that a kantemba business in Cairo road? Basically these parastatals are just there to finance the good living of the bureaucrats. Government can sell some shares in some companies , for example, Indeni, Zambia Railways, Nitrogen Chemicals of Zambia, Zamtel, and so on. Then you will also create an appetite for capital inflows in the country. When the Mwanawasa government sold Zanaco to the private sector, there was money for capitalization and there was also money to the treasury. The same happened when the Rupiah government sold Zamtel. And that is the money now coming into the treasury which can be used to pay the suppliers and the contractors who are now crying. You have seen those agro-dealers,” said Hamududu.